Churches, Politics and 501(c)(3) Status

Churches and other non-profit organizations organized as IRC 501(c)(3) organizations are forbidden to support or oppose political candidates, to involve themselves in legislative issues, or to support or oppose ballot initiatives. And yet this very clear demarcation in the law often goes ignored with impunity. Some churches appear to operate as national political parties in total defiance of the restrictions of their 501(c)(3) status.

501(c)(3) status is given to the following types of organizations: Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.

While there are many forms of non-profit organizations that are tax exempt, donations are tax-deductible only when given to 501(c)(3) organizations. Therefore, 501(c)(3) organizations have a privileged place in American law and tax code. Your house of worship typically shares this privileged status along with your little league, community theater group, animal shelter, food pantry, and non-profit university.

In order to maintain this privileges status, any 501(c)(3) organization must refrain from political activity. Failure to so refrain from political activity may cause the impositions of sanctions by the federal government, including the revocation of the organization’s 501(c)(3) status, plus the levying of excise taxes under IRC 4955. The question we must ask is, “Why are these legal sanctions so often ignored?”

There is a big difference between a church and a political party (or political action committee), or at least there should be! Contributions to a political party or PAC are not tax-deductible, while contributions to churches and other charities are fully tax-deductible. When churches are allowed to operate as political parties using tax-deductible donations, this undermines the whole purpose of the privileged 501(c)(3) status and creates an uneven playing field in the political arena. When most church organizations are respectful of their privileged status and compliant with the restrictions entailed thereby, other church organizations flagrantly abuse their status.

The law is clear that any improper political involvement can trigger sanctions. Quoting from the IRS website:

An organization does will not qualify for tax-exempt status under IRC 501(c)(3) unless it “does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office”. http://www.irs.gov/pub/irs-tege/eotopici02.pdf (“I. Election Year Issues” by Judith E. Kindell and John Francis Reilly)

501(c)(3) organizations have every right to advocate for issues and causes. Such issue advocacy might include homelessness, immigration, environmental issues, reproductive rights, spay/neuter campaigns or any other conceivable topic. However, there is a very clear line of demarcation between advocacy and engaging in political activities. The following is a partial list of prohibited political activities: Endorsing or supporting pro-life (or pro-choice) candidates. Publishing approval ratings of politicians based upon the organization’s objectives. Support for (or opposition to) any legislation or ballot initiative. Production or distribution of voter guides. Any fundraising for or contributing to candidates.

501(c)(3) organizations have been given a privileged tax status. They have every moral and legal obligation to refrain from violating that status through their elicit participation in the political process. We need to hold them accountable.